Ethanol Blog

Corn Rally Draws Ethanol Support

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures have rallied 8 cents per gallon over the last three trading sessions with the strong rally in corn markets leading to the expectation that follow-through buyer support will continue to develop over the near future.

July ethanol futures rallied 2.7 cents per gallon early Tuesday as traders account for higher corn prices. This pushed prices to $1.545 a gallon, up from the three-month low of $1.45 per gallon at the middle of the month.

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Although there is some uncertainty growing in the complex as to just how much follow-through support will develop through the summer, and if inventory levels once again grow in the upcoming weekly EIA report.

But for now, the attention of ethanol traders does not extend beyond the buyer momentum in the corn market seen over the last week. Corn prices have rallied 14 cents per bushel; along with significantly increasing production costs, this casts some serious doubts on the overall success and health of the current corn crop that is in the field.

Typical weather patterns can be blamed for the recent market volatility, and is not unusual for this time of year, but the recent pressure in ethanol futures markets make such a move in corn market a prime catalyst to draw active buyers back into the complex.

Rick Kment can be reached at rick.kment@dtn.com

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